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sinking fund management for strata and commercial buildings
what we'll be looking at will be
the sinking fund and its main components and
the history of sinking funds and the requirements of
that in the industry around Australia to give you good idea
on how the sinking funds come together and
and how they come about I suppose so
this will give you a good insight on how these are prepared and
and what people look at when preparing one of these sinking funds
alright so when you own a unit there's usually two funds that most people look
at
one is your administrations fund which is your day to day
expenditure and also the sinking fund what we'll be looking at
which is your big ticket items, okay?
so we'll go on to the next slide, okay so what is a sinking fund?
so sinking fund is a detailed and comprehensive estimate
of the councils corporate sinking fund expenditure
for the next ten years that includes estimating and repainting of common
property and the buildings that are owned
by the body corporate so if you look at maintaining your vehicle
and servicing your car you've gotta do the same
to the common property area and maintain that
as if it was back in its original state so that
that's the whole point out that that sinking fund and that from there
so has a few components
that are in the thinking fund we're wanting to look at
so we need to provide for the necessary and
reasonable expenditure from the sinking fund for that financial year
reserve a proportional amount to anticipate the expenditure
over the next nine years and also you've gotta take into
account the anticipated expenditure
of the capital nature as well as the
period of replacement of these items of a major capital nature
and also other capital that should be reasonably met
in that time period so it gets a little bit confusing sometimes to work out what
needs to go in and what doesn't
but we can look at that a little bit it later on
alright so what I will do
we'll go and have a look at the history of
sinking funds and that around Australia at the moment
So in Queensland and was originally introduced
in 1987
this was
looked at all
or coined by partners
they were the first people to come into the industry to
put together the sinking funds with that, the lot, a lot of the legislation where that
came about
there's a lot of the stuff in the
retirement villages and stuff like that so
then it went into NSW
in 2004 to 2006 now this was introduced over
a three-year period because there was like 777,000
unit complexes in NSW they thought this is gonna be a bit difficult for us to
implement this all in one hit so they had that on a say
a three-stage approach. In the ACT
the sinking fund forecasters was introduced in 2009
so that was sort of a bit
a little bit later from legislation from there
In Victoria
it was also brought in in 2009 but only for
units over $200,000 in turnover
or 100 units in size
there's some trends now that the smaller units are now increasing
and they call it a maintenance plan
Victoria and also
in Tasmania's legislation it's done
by the likes of
the committee if they feel like doing one of those
So in WA South Australia and the Northern Territory
they call it a reserve fund forecast and there's no legal requirements to have a
a forecast done in that period time
so yeah it's quite interesting to see on how
this stuff all goes together with all the history of
the sinking funds in Australia and this is
governed by the strata community Australia